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News for New York Times: Affordable Care Act Affects WomenDean Baker / September 19, 2014
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Health Insurance: Healthy for Entrepreneurship?A new paper by Gareth Olds finds that the availability of publicly funded insurance may have boosted entrepreneurship by allowing parents to start their own businesses while maintaining health insurance coverage for their children. The Children’s Health Insurance Program (CHIP) provides health insurance to children in families with incomes too high for Medicaid but below a higher cutoff that varies by state.
CEPR and / September 18, 2014
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The Fed and InequalityCharles Lane has a column in the Washington Post arguing that the Fed has contributed to inequality with its low interest policy. Essentially the argument is that low interest rates have helped to push up asset values, most importantly stock prices. Since the rich have stock and most people don't, this means the rich are getting richer relative to everyone else. Since a lot of people who should know better have made this argument, it is worth addressing.
First, it is important to understand the nature of the inequality. If we're looking at wealth, the issue is pretty clear. Higher stock prices mean people who own stock are wealthier relative to the population as a whole. (Remember this when you hear reporters tell you the good news that the stock market is up.)
But note the nature of the increase implied here. Grabbing our old "other things equal," lower interest rates mean higher stock prices. However, this also means that higher interest rates will mean lower stock prices. Most people expect that at some point interest rates will rise due to a strengthening economy. (Many economists want the Fed to raise interest rates now.) So we can expect the wealth inequality the Fed has created with its low interest rate and quantitative easing policies to go away once the economy is approaching its potential level of output.
In that case we are looking at an explicitly temporary increase in inequality. Should we be upset by this?
The situation is even more striking if we look at income. If we count the capital gains in the stock market as income, then we have seen a huge increase in income inequality as stock prices roared back from their 2009 lows. Here also part of this will be reversed as the rich have capital losses when interest rates go back up. (Some of the increase is just a reversal of a market that was depressed due to fears of economic collapse.)
It's difficult to see the big problem here. Remember, the economy's problem is too little demand. Let's say that a few more times just in case anyone in a policy position in Washington is paying attention. The economy's problem is too little demand. The economy's problem is too little demand. The economy's problem is too little demand.
Dean Baker / September 18, 2014
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Europe Is Already Suffering From the Bad Story With DeflationDean Baker / September 18, 2014
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The New York Times Doesn't Like the U.K. Health Care SystemDean Baker / September 17, 2014
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Timothy Geithner's Revenge: A Broken Bond Rating SystemDean Baker / September 17, 2014
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Latin America and the Caribbean
U.N. and U.S. Blame Haiti’s Opposition for Delayed Elections, Ignore HistoryJake Johnston and Alexander Main / September 16, 2014
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Trade Deals Do the International Equivalent of Banning State Tax IncentivesDean Baker / September 16, 2014
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The Myth that Sold the Financial BailoutDean Baker
Al Jazeera America, September 15, 2014
Dean Baker / September 15, 2014
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Obamacare and Family Values: Parents Get to Stay Home With ChildrenDean Baker
Truthout, September 15, 2014
Dean Baker / September 15, 2014
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NYT Does Mind Reading on Rhode Island Gubernatorial CandidateDean Baker / September 15, 2014
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Ensuring that Airbnb Renters Comply With the Law: It's Simple!Dean Baker / September 14, 2014
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It Really Wasn't Hard to See the Dangers Posed by the Housing BubbleDean Baker / September 13, 2014
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Manufacturing Employment Is Down Everywhere, Not Just MichiganDean Baker / September 13, 2014
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Latin America and the Caribbean
Is the Martelly Government Putting Former President Aristide in Danger?CEPR / September 12, 2014
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Skills Gap In Manufacturing Seems to Be Primarily at the TopDean Baker / September 12, 2014
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State and Local Pension Funds Face a Shortfall Equal to 0.3 Percent of GDPDean Baker / September 12, 2014
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Are Corporate Inversions Shareholder Capitalism or Wall Street Capitalism?Dean Baker / September 12, 2014